Undue Influence: Taking Advantage of Elderly Relatives

14 January 2019

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Do you think a member of your family is taking advantage of an elderly relative? Can you set aside financial decisions made where there has been an undue influence?

It is not uncommon for families to look at ways in which they can seek to legitimately secure the future finances of their parents or elderly relatives for a number of reasons such as to avoid the risk of losing life savings to fund care home fees or to reduce any Inheritance Tax liability on death. We would like to think family members would only act in good faith when engaging in such family discussions. However, in our experience, unfortunately, it is sometimes the contrary.

This article seeks to discuss whether or not transactions which have already taken place such as the transfer of the family home, can be set aside where undue influence or duress has been used. The recent High Court decision in Paull v Paull [2018] EWHC 2520 (Ch) highlights the issues in this respect and outlines the current legal position.

The facts

The case involves the transfer of Neville Paull’s (the father’s) home to his son Bradley Paull where undue influence was used. In 2010 Neville transferred his home to Bradley. At the time, Neville and his partner, Linda, lived at the property. Neville argued that he only transferred the property on the basis that Bradley agreed he would ‘look after the property’ for him. Additionally, that he would allow him and Linda to remain in the property for their lifetime.

Neville was 67 years old at the time of the transaction and he was thought to be frail and vulnerable. It was Bradley’s case that his father wanted to transfer the property. This was because Neville:

Wanted to ensure that no part of his property went to Linda’s children from an earlier relationship;

That he wanted to avoid the property being sold by the local authority to pay care home fees; and

That he wanted to avoid the payment of Inheritance Tax upon his death.

Neville sought to have the transaction set aside on the grounds that Bradley had unduly influenced him to make the transfer.

Undue Influence

The principles regarding claims for undue influence can be traced as far back as 1887 to the case of Allcard v Skinner (1887) 36 Ch D 145, in which the judgment of Lindley LJ outlined that there were two requirements to be satisfied to finding a claim of presumed undue influence:

‘A’ reposes trust and confidence in ‘B’ and is therefore predisposed to follow B’s direction; and

The transaction calls for explanation in that it cannot be reasonably accounted for by reference to the nature of the relationship between ‘A’ and ‘B’.

If the presumption is established, the defendant must then rebut the presumption. If the defendant fails to do this, the transaction is declared voidable.

Applying the above test, the judge, in this case, found that both requirements were satisfied in Neville’s favour. As such, he could presume that Neville had been unduly influenced.

Circumstances particular to this case

Evidence as to the nature of the relationship between Neville and Bradley following the transaction demonstrated that Neville delegated significant control over his documentation to Bradley.

There was nothing to suggest a contrary relationship had existed between them before the transaction.

Neville stated in oral evidence that the idea for the transfer had emanated from Bradley;

Bradley proved to be an unreliable witness;

The transaction ‘undoubtedly called for explanation’ given that its result was to deprive Neville and his partner of their sole residence and leave them with less than half of their capital assets.

The burden of proof consequently fell to Bradley to establish that the transaction was entered into as a result of a free and independent decision by Neville. To this end, Bradley relied on the fact that the solicitor acting in the transaction had advised Neville on the consequences of the transfer prior to the transaction being entered into.

However, the judge, on the authority of Pesticcio v Huet [2004] EWCA Civ 372 and Thompson v Foy [2010] P&CR 16, found that the solicitor’s involvement was insufficient to dissipate or negate the effects of Bradley’s undue influence and therefore the transaction ought to be set aside.

Why would Solicitors advice not be relied upon?

In this case, the solicitor had failed to ensure Neville truly understood the nature of the transaction. Not to mention the fact that it was irrevocable. The solicitor, in an interview with Neville designed to discourage the transaction, read the Firm’s note on the subject. This proved inaccessible to laypeople. It did not explain with any clarity that the transfer was irrevocable. It could not be expected to have made Neville take pause and consider his decision.

The solicitor had not taken sufficient steps to ensure that Bradley was not in proximity to Neville when advice was given. It was not enough for Bradley to simply be removed from the room when advice was given.

The court was clear that a solicitor was under a significant obligation to ensure that the claimant was making the decision freely and independently. And they were to go the extra mile to achieve this. Therefore, solicitors should ensure that any advice given is clear, comprehensive and, significantly, independent from the defendant’s input.

The High Court set aside the transfer from Neville to Bradley.

In conclusion

Decisions can be set aside. The courts will look to protect the vulnerable. However, each case will be decided on its own particular set of circumstances.

Interestingly here, it was the solicitor’s failure to take reasonable steps to ensure that Neville was independently advised that clinched the decision, as demonstrated by comparison with the case of Brindley v Brindley [2018] EWHC 157 (Ch). In Brindley, the transaction was not voidable for undue influence. The court found that the solicitor had ensured the claimant received independent advice before the transaction was entered into. Therefore, the decision was freely and independently made.

174 Law has many years experience in advising elderly clients and asset preservation. This case demonstrates the importance of not only seeking legal advice but getting the right lawyer to do the job. You may not be able to choose your family but you can choose your lawyer. For more details, contact one of our experts via kathy.bibby@174law.co.uk.